Iowa. August 29,

Iowa August 29, 2018 Clarissa_Preston@ncci.com 561-945-4517 Dan_Benzshawel@ncci.com 561-893-3093

Iowa State Advisory Forum The Future@Work (Video) Countrywide Workers Compensation System Iowa s Workers Compensation System Countrywide and Iowa Labor Markets The Data Connection (Video) Legislative Issues Opioids and Workers Compensation Residual Market: Countrywide and Iowa 7

The Future@Work (Video)

Countrywide Workers Compensation System

Countrywide Workers Compensation (WC) An Overview Premium decreased slightly in the most recent year The combined ratio continues to show favorable results Frequency declined again at the latest point Medical and indemnity severity increased modestly 11

WC Net Written Premium Private Carriers and State Funds $ Billions 50 State Funds 47.8 45.6 45.0 40 Private Carriers 30 20 37.8 40.1 39.8 10 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p Calendar Year p Preliminary Source: NAIC s Annual Statement data; includes state insurance fund data for the following states: AZ, CA, CO, HI, ID, KY, LA, MD, MO, MT, NM, OK, OR, RI, TX, and UT Each calendar year total for state funds includes all funds operating as a state fund in that year 12

WC Direct Written Premium (DWP) Change by Component Private Carriers NCCI States Change in Direct Written Premium: 0.0% 2017 vs. 2016 Payroll +4.4% Loss Cost and Mix -4.2% Carrier Discounting +0.4% Other Factors -0.4% Sources: DWP Change: NAIC s Annual Statement Statutory Page 14 for all states where NCCI provides ratemaking services Components: NCCI s Policy data 13

Increases in Payroll Continue to Drive Changes in Premium Forecast Change 2016 2017 Payroll Wage Rate +3.4% Employment +1.6% +1.8% 4% 3% 2% 1% 4% 3% 2% 1% Prof. & Business Services Trade, Transport., & Utilities Education & Health Services Manufacturing Financial Construction Leisure & All Other Activities Hospitality Prof. & Business Services Trade, Transport., & Utilities Education & Health Services Manufacturing Financial Construction Leisure & All Other Activities Hospitality Sources: Moody s Analytics and NCCI 14

WC Approved Changes in Bureau Premium Level Weighted by Effective Date NCCI States Percent 5 0-5 -5.4-10 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18p Calendar Year -9.6 Source: NAIC s Annual Statement Statutory Page 14 Values reflect changes in average premium levels between years, based on approved changes in advisory rates, loss costs, assigned risk rates, and rating values, as of 8/10/2018 IN and NC are filed in cooperation with state rating bureaus 15

WC Impact of Discounting on Premium Private Carriers NCCI States Percent 5 0.5-5 -15-25 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p Policy Year p Preliminary Sources: NAIC s Annual Statement Statutory Page 14 and NCCI s Financial Call data Rate/loss cost departure reflects carrier departure from NCCI rate level, which excludes a profit and contingency provision and expense constant Based on data for all states where NCCI provides ratemaking services, excluding TX 16

WC Combined Ratio Underwriting Gain Achieved Private Carriers Percent 122 115 93 89 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p p Preliminary Source: NAIC s Annual Statement data Calendar Year 17

WC Combined Ratio by Component Private Carriers Percent Dividends 1 2 Underwriting Expense Ratio 25 26 Loss Adjustment Expense (LAE) Ratio 14 13 Loss Ratio 53 49 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p p Preliminary Source: NAIC s Annual Statement data Calendar Year 18

WC Net Combined Ratios Calendar Year vs. Accident Year As Reported Private Carriers Percent 125 Calendar Year Accident Year 100 94 95 89 99 75 50 25 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p p Preliminary Source: NAIC s Annual Statement data Accident Year information is reported as of 12/31/2017 Includes dividends to policyholders 19

WC Lost-Time Claim Frequency Claims per $1M Pure Premium, Private Carriers and State Funds NCCI States Percent 5 0-5 Average Annual Change: 3.7% (1997 2016) -6.2-6 -10 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p Accident Year 2010 and 2011 adjusted primarily for significant changes in audit activity p Preliminary based on data valued as of 12/31/2017 Source: NCCI s Financial Call data, developed to ultimate, premium adjusted to current wage and voluntary pure premium level, excludes high-deductible policies; based on data through 12/31/2016 Values displayed reflect the methodology underlying the most recent rate/loss cost filing Includes all states where NCCI provides ratemaking services; WV is excluded through 2011 20

WC Average Indemnity Claim Severity Private Carriers and State Funds NCCI States Severity ($ Thousands) 25 2.7% 4% 20 15 10 $23.4 $24.4 5 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p Accident Year p Preliminary based on data valued as of 12/31/2017 Source: NCCI s Financial Call data, developed to ultimate, excludes high-deductible policies; based on data through 12/31/2016 Values displayed reflect the methodology underlying the most recent rate/loss cost filing Includes all states where NCCI provides ratemaking services; WV is excluded through 2007 21

Relative Growth Rates Indemnity Severity vs. Wage Inflation Private Carriers and State Funds NCCI States Changes in indemnity claim severity outpaced changes in wage inflation by 1.9% per year, on average Indemnity claim severity and wages grew at a similar rate 97 98 99 00 01 02 03 04 05 06 07 07 08 09 10 11 12 13 14 15 16 17p Accident Year Accident Year p Preliminary based on data valued as of 12/31/2017 Sources: Severity: NCCI s Financial Call data, developed to ultimate, excludes high-deductible policies; based on data through 12/31/2016 Values displayed reflect the methodology underlying the most recent rate/loss cost filing Includes all states where NCCI provides ratemaking services; WV is excluded through 2007 US Average Weekly Wage: 1995 2007 and 2012 2016, Quarterly Census of Employment and Wages; 2008 2011, NCCI; 2017p, NCCI and Moody s Analytics 22

WC Average Medical Lost-Time Claim Severity Private Carriers and State Funds NCCI States Severity ($ Thousands) 30 6.0% 4% 25 20 15 10 $28.8 $29.9 5 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p Accident Year p Preliminary based on data valued as of 12/31/2017 Source: NCCI s Financial Call data, developed to ultimate, excludes high-deductible policies; based on data through 12/31/2016 Values displayed reflect the methodology underlying the most recent rate/loss cost filing Includes all states where NCCI provides ratemaking services; WV is excluded through 2007 23

Relative Growth Rates Medical Severity vs. Price Inflation Private Carriers and State Funds NCCI States Medical lost-time claim severity grew approximately 4.5% per year faster than medical care prices Change in Medical lost-time claim severity and medical care prices tracked one another 97 98 99 00 01 02 03 04 05 06 07 07 08 09 10 11 12 13 14 15 16 17p Accident Year Accident Year p Preliminary based on data valued as of 12/31/2017 Sources: Severity: NCCI s Financial Call data, developed to ultimate, excludes high-deductible policies; based on data through 12/31/2016 Values displayed reflect the methodology underlying the most recent rate/loss cost filing Includes all states where NCCI provides ratemaking services; WV is excluded through 2007 Personal Health Care (PHC) Chain-Weighted Price Index: Centers for Medicare & Medicaid Services 24

Iowa s Workers Compensation System

Iowa s Workers Compensation System An Overview Premium has been stable in recent years Combined ratios are favorable Frequency continues to decline Indemnity and medical costs have decreased in latest year 26

Iowa Workers Compensation Premium Volume Direct Written Premium in $ Millions 900 800 700 763 747 600 500 400 300 200 100 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Calendar Year Source: NAIC s Annual Statement data 27

Impact of Discounting on Workers Compensation Premium in Iowa 15 0-5.5-15 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17p Policy Year p Preliminary Based on data through 12/31/2017 28

Iowa Combined Ratios Accident Year 100 100 96 94 92 92 2013 2014 2015 2016 2017 Accident Year Sources: NCCI s financial data through 12/31/2017 and NAIC s Annual Statement data 29

Iowa Combined Ratios by Component Accident Year Dividends 3 Expense Ratio 33 Loss Ratio 56 2013 2014 2015 2016 2017 Accident Year Sources: NCCI s financial data through 12/31/2017 and NAIC s Annual Statement data 30

Iowa Workers Compensation Lost-Time Claim Frequency Lost-Time Claims Percent Change 5 Cumulative Change of 39.8% (2002 2016) 0-5 -10-8.5-7.6-15 -20 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Policy Year Based on NCCI s financial data through 12/31/2017, developed to ultimate, premium adjusted to common wage level 31

Iowa Average Indemnity Claim Severity Lost-Time Claim Severity in $ Thousands 20 10 Cumulative Change of +109.7% (2002 2016) 15.0% 2.2% 6.4% 11.8% 11.8% 5.4% 5.6% 2.1% -0.4% 1.9% 8.7% 2.9% 8.9% -4.4% $26.7 $25.5 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Policy Year Based on NCCI s financial data through 12/31/2017, on-leveled and developed to ultimate 32

Iowa Average Medical Claim Severity Lost-Time Claim Severity in $ Thousands 30 20 Cumulative Change of +128.2% (2002 2016) 9.4% 17.7% -2.7% 13.7% 7.8% 11.1% 13.0% -2.7% -1.0% 7.7% 3.3% 0.8% 13.1% -3.2% $34.5 $33.4 10 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Policy Year Based on NCCI s financial data through 12/31/2017, on-leveled and developed to ultimate 33

Iowa Filing Activity Voluntary and Assigned Risk Rate Changes -1.9% -1.9% -3.9% -3.9% -4.7% -4.7% Voluntary Assigned Risk -8.7% -8.7% -9.2% -9.2% 1/1/2017 7/1/2017 1/1/2018 6/1/2018 1/1/2019* *Pending 34

Iowa January 1, 2019 Rate Filing Overall Rate Level Change: 9.2% Change in Experience: Change in Trend: Change in Benefits: Change in All Other: 4.9% 4.4% 0.0% 0.1% 35

Iowa January 1, 2019 Filing Average Changes by Industry Group Overall Rate Level Change: 9.2% -6.6% -8.7% -9.0% -8.7% -10.7% Manufacturing Contracting Office & Clerical Goods & Services Miscellaneous 36

Current Average Voluntary Pure Loss Costs Using Iowa Payroll Distribution Pure Loss Cost All Classes 1.60 1.38 1.33 1.20 1.10 0.80 0.40 IA IL KS MO NE SD Region Country Based on the latest NCCI approved rates and loss costs in the various states 37

Current NCCI Voluntary Market Loss Cost/Rate Level Changes Excludes Law-Only Filings Percent 10 Approved Pending 5 0 0.4-5 -10-9.2-15 -20-16.7 CO OK NM AR CT NH AL TX WV IN TN ME NC KY MT OR FL UT IA GA IL AK AZ KS NE SC SD MD MS ID RI VT DC MO VA NV HI LA Reflects the most recent experience filing in each jurisdiction Due to the timing of the individual loss cost/rate filings, the figures shown may include changes from prior filing seasons 38

Current Voluntary Market Rates/Loss Costs Midwestern States Minnesota 1/1/2019 1.2% Missouri 1/1/2018-3.0% Wisconsin South Dakota Nebraska Kansas Illinois* Iowa* Michigan 10/1/2018 7/1/2018 2/1/2018 1/1/2018 1/1/2019 1/1/2019 1/1/2018-6.03% -7.0% -7.6% -7.6% -8.5% -9.2% -9.3% Indiana 1/1/2018-12.8% Oklahoma 1/1/2018-16.3% *Pending 39

Countrywide and Iowa Labor Markets

National Economic Highlights and Their Impact on Workers Compensation National Economic Indicator Private employment growth continues to be near 2% Potential Impact on the Workers Compensation Market Continuing payroll and premium growth Wage growth is increasing and expected to accelerate Upward pressure on payroll and premium growth as well as indemnity severity Medical inflation is forecast to rise Short-term and long-term interest rates have increased Increases in medical costs per claim Investment yields will increase across the spectrum of bond maturities 41

Change in Private Employment Private Employment Growth Is Below the National Average Percent 6 Iowa United States 4 2 +2.1 +1.8 +1.8 0 +0.7 0.2 +0.8-2 2016 Q1 2017 Q1 2018 Q1 Year-on-year percentage change; employment is for Total Private Industry Frequency of observation: quarterly; 2015 Q1 2018 Q1 Sources: US Bureau of Labor Statistics, Moody s Analytics, and NCCI 42

Change in Average Weekly Wages Wage Growth Is Above the National Average Percent 6 4 2 0 Iowa +1.5 +1.5 +1.2 United States +1.6 +3.8 +3.2-2 2016 Q1 2017 Q1 2018 Q1 Year-on-year percentage change; wages are for Total Private Industry Frequency of observation: quarterly; 2015 Q1 2018 Q1 Sources: US Bureau of Labor Statistics, Bureau of Economic Analysis, Moody s Analytics, and NCCI 43

Private Industry Payroll Growth Decomposition Payroll Growth Is Lower Than the National Average Percent 6 Iowa United States 4 2 +3.8 +4.6 +5.0 +3.2 Payroll AWW +1.8 Employment +0.8 0-2 AWW = Average Weekly Wage 2018 Q1 year-on-year percentage change Sources: US Bureau of Labor Statistics, Bureau of Economic Analysis, Moody s Analytics, and NCCI 44

Change in Employment by Sector Employment Has Decreased in Several Sectors in the Past Year Construction Manufacturing Government Construction Industrial Sector Natural Professional resources and business and mining services Education Financial activities and health services Manufacturing Leisure and hospitality Professional Education and and health business services services Financial Government activities Leisure Natural and resources hospitality and mining Other Information services Trade, transportation, and utilities Information Other services Year-Over-Year Percent Change, 2018 2017Q4 Q1Q4 Sector Size % Share 1-Year Change WV IA +14.0 +4.9 224,100 33,900 14 5 +10,600 +4,200 US +3.3 +1.8 WV IA +7.4 +2.2 141,300 21,700 39 +1,500 +3,000 US +5.4 +2.5 WV IA +0.7 +2.5 130,700 111,200 17 +2,700 +900 US +2.1 +1.6 WV IA +0.8 +1.4 145,300 47,000 69 +2,000 +300 US +1.5 +2.0 WV IA +0.5 +0.2 232,400 66,100 15 9 +300 +500 US +2.2 +2.0 WV IA +0.4 +0.2 260,100 26,900 16 4 +100 +400 US +1.8 +0.0 WV IA 0.4 0.2 73,900 5,800 10 300 100 US +2.3 +6.6 WV IA 0.6 0.9 56,200 21,800 71 300 200 US +1.7 1.7 WV IA 0.5 132,100 313,900 18 20 1,600 700 US +0.7 +0.9 WV IA 12.0 3.1 59,200 8,300 14 1,200 1,900 US 1.3 +1.6 WV IA 2.5 6.2 153,600 73,700 20 5 4,000 4,900 US +0.1 +3.5 Employment numbers are rounded to the nearest hundred Year-on-year percentage change; frequency of observation: quarterly; 2018 Q1 Sources: US Bureau of Labor Statistics, Moody s Analytics, and NCCI 45

Iowa s Payroll Growth Decomposition by Sector Employment Growth + AWW Growth Payroll Growth 10% 5% 0 +5% +10% Manufacturing Trade, transportation, and utilities Government Education and health services Financial activities Professional and business services Construction Leisure and hospitality Other services Information Natural resources and mining 10% 5% 0 +5% +10% 10% 5% 0 +5% +10% AWW = Average Weekly Wage 2018 Q1 year-on-year percentage change; sectors are in descending order by the volume of state payroll amounts Sources: US Bureau of Labor Statistics, Bureau of Economic Analysis, Moody s Analytics, and NCCI 46

Headline Unemployment Rate The Unemployment Rate Is Below the National Rate Percent 6 4 US: 4.0 2 IA: 2.7 0 2017 2018 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Headline Unemployment Rate, seasonally adjusted Frequency of observation: monthly; latest available data point: June 2018 Source: US Bureau of Labor Statistics (BLS), www.bls.gov 47

Iowa s Labor Market Iowa s unemployment rate is below the US rate Payroll increased in Iowa, primarily driven by strong increases in wages rather than employment Manufacturing is the sector with the largest payroll in the state Payroll grew fastest in the Financial Activities and Manufacturing sectors Employment growth is below the US rate Employment growth in the Manufacturing sector has outperformed the national average Construction employment decreased over the last 12 months with the wrap-up of large-scale projects 48

The Data Connection (Video)

Legislative Issues

Legislative Overview for 2018 As of June 30, 2018: NCCI has tracked approximately 814 state and federal workers compensation-related bills 462 of the bills are in NCCI states 76 bills have been enacted (includes all jurisdictions and federal) 53

2018 Workers Compensation Legislative Activity CA OR WA NV ID UT MT WY CO ND SD NE KS MN IA MO WI IL IN MI KY OH WV PA VA NY VT CT ME NJ DE MD DC NH MA RI AZ NM OK AR TN MS AL GA SC NC AK TX LA HI FL States Not in Session 0 10 Bills Introduced 11 20 Bills Introduced 21 30 Bills Introduced More Than 30 Bills Introduced 54

Top Five WC Legislative Trends in 2018 Number of Bills by Category Compliance 64 Coverage Issues 66 Reimbursement/Fee Schedule 91 Court/Legal Issues 95 First Responders 103 55

NCCI s Engagement at the Federal Level NCCI works with Congress and federal agencies to educate and inform federal public policymakers on the impact of legislative and regulatory issues on the state-based workers compensation system. 56

NCCI s Engagement at the Federal Level (cont d) NCCI provides information and insights to several federal agencies, including: US Department of Labor (USDOL) National Institute for Occupational Safety and Health (NIOSH) Government Accountability Office (GAO) US Department of the Treasury 57

Federal Insurance Office Report on TRIP Effectiveness Key Findings: The Terrorism Risk Insurance Program (TRIP) is effective in making terrorism risk insurance available and affordable TRIP has not had the effect of discouraging or impeding property/casualty insurance TRIP serves as an important backstop for workers compensation insurance 58

State Legislative Activity 2018 Legislative Session SB 2257 Defines marketplace contractors/independent contractors In part, provides that a marketplace contractor shall be treated as an independent contractor and not an employee of a marketplace platform for all purposes under state or local law if certain conditions occur Enacted April 4, 2018, with an effective date of July 1, 2018 59

Opioids and Workers Compensation

What Is a Prescription Opioid? Prescription opioids are a class of drugs used to treat moderate to severe pain, particularly chronic intractable pain Prescription opioids include oxycodone (OxyContin ), hydrocodone (Vicodin ), and morphine Opioids bind to and activate opioid receptors on cells in the brain and body Pain signals are blocked, and large amounts of dopamine are released Misuse of opioids can slow down breathing, which can lead to death 61

Background According to the US Department of Health and Human Services (HHS), in 2016: 11.5 million Americans misused prescription opioids 2.1 million reported an opioid disorder 116 died every day from an opioid-related overdose According to the Centers for Disease Control and Prevention (CDC), in 2016: 40% of opioid overdose deaths involved a prescription opioid The number of overdose deaths involving prescription opioids was five times higher than in 1999 The US prescribing rate for opioids was 61 prescriptions per 100 persons 62

Impact on Workers Compensation According to NCCI s data, injured workers who were prescribed at least one prescription in 2016 received three times as many opioid prescriptions as the US opioid prescribing rate Workers compensation is directly impacted because injured workers are often prescribed opioids for pain 63

Opioids Are a Significant Share of WC Prescription Drug (Rx) Costs Two in five Rx claims received an opioid in Service Year (SY) 2016 Claims Costs The average cost of an opioid Rx claim is four times that of a nonopioid Rx claim One in four dollars spent for Rx s in workers compensation is for opioids Spend Source: NCCI s Medical Data Call, Service Year 2016; states included are AK, AL, AR, AZ, CO, CT, DC, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MI, MN, MO, MS, MT, NC, NE, NH, NM, NV, OK, OR, RI, SC, SD, TN, UT, VA, VT, and WI 64

How Did We Get Here? Physicians interviewed by NCCI point to four key factors that led to the rise in opioid prescribing and consumption: 65

State Regulators Perspective State regulators interviewed by NCCI shared that the tools in the fight against the opioid epidemic include: 66

Legislative and Regulatory Activity In 2018, a large majority of states considered prescription drug legislation or regulatory changes, including: Drug formularies Limitation on physician dispensing and repackaged drugs PDMPs Prescription drug fee schedules Federal: New Initiative to Stop Opioid Abuse and Reduce Drug Supply and Demand CDC Guidelines provide recommendations for prescribing opioid pain medication Proposed Legislation Prescription Drug Monitoring Act of 2017 67

Claims Professionals Perspective Claims professionals interviewed by NCCI say that there are four key elements that are critical for successfully managing claims involving opioids: 68

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Residual Market: Countrywide and Iowa

NCCI Residual Market Services As of January 2018, NCCI provides Plan Administration services in the following states: AK, AL, AR, AZ, CT, DC, GA, IA, ID, IL, KS, MS, NH, NM, NV, OR, SC, SD, TN, VA, VT, and WV Other Plan Services: DE, IN, and NC As of January 2018, NCCI provides Pool Administration services in the following states: National Pool: AK, AL, AR, AZ, CT, DC, DE, GA, IA, ID, IL, KS, NC, NH, NJ, NV, OR, SC, SD, TN, VA, VT, and WV New Mexico Pool Tennessee Reinsurance Mechanism Financial and Actuarial Services: MA and MI 72

Assigned Risk Plan Market Share by State As of 12/31/17 State Total Policy Count Total Premium Market Share % Alaska 7,468 $ 33,684,821 Vermont 3,838 17,986,224 Arkansas 6,803 23,076,982 Tennessee 12,978 62,849,355 Kansas 9,001 27,805,502 New Hampshire 4,944 17,508,396 Nevada 5,248 21,588,506 Virginia 16,276 61,167,550 South Carolina 13,729 34,603,981 West Virginia 2,386 15,555,676 Oregon 9,058 36,874,920 Georgia 22,502 69,854,580 Connecticut 15,031 44,999,559 Arizona 5,951 39,668,103 South Dakota 1,449 7,551,767 Iowa 4,402 29,437,546 4.6 Illinois 34,268 95,218,290 Mississippi 2,592 14,790,560 New Mexico 1,926 7,319,441 District of Columbia 1,119 6,167,660 Alabama 1,634 8,458,783 Idaho 929 2,473,969 Total 183,532 $678,642,171 6.0 Policy count and premium data are on a policy year basis as reported to NCCI, for policies effective from January 1, 2017, to December 31, 2017, including prorated cancellations, with all policies premium associated to the dominant state Market share percentage is from NCCI s 2017 Residual Market Management Summary 73

Iowa Residual Market Plan Premium As of 12/31/17 $ Millions 50 45 40 35 30 25 20 15 10 5 $33.6 $29.4 2009 2010 2011 2012 2013 2014 2015 2016 2017 Policy Year Premium data is on a policy year basis as reported to NCCI, for policies effective from January 1, 2017, to December 31, 2017, including prorated cancellations, with all policies premium associated to the dominant state 74

Iowa Residual Market Share Plan Premium as a Percentage of Direct Written Premium 6.3% 6.4% 5.9% 4.7% 4.6% 2013 2014 2015 2016 2017 Calendar Year Market share percentage is from NCCI s 2017 Residual Market Management Summary 75

Iowa Residual Market Plan Policy Counts As of 12/31/17 6,000 5,000 4,000 4,571 4,402 3,000 2,000 1,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 Policy Year Policy count data is on a policy year basis as reported to NCCI, for policies effective from January 1, 2017, to December 31, 2017, including prorated cancellations, with all policies premium associated to the dominant state 76

Iowa Residual Market Premium by Size of Risk As of 12/31/17 Premium ($Millions) Size of Risk 2016 2017 % Change $ 0 2,499 2.35 2.29-2.4 $ 2,500 4,999 2.79 2.87 2.8 $ 5,000 9,999 4.14 3.72 $ 10,000 49,999 12.40 11.13 $ 50,000 99,999 3.72 3.45 $ 100,000 and Over 8.20 5.98 Total 33.60 29.44-10.2-10.2-7.3-27.1-12.4 262.8 Premium data is on a Policy Year basis as reported to NCCI, for policies effective from January 1, 2016 to December 31, 2016, and policies effective from January 1, 2017 to December 31, 2017, including prorated cancellations, with all policies premium associated to the dominant state. Change is calculated based upon the Premium data. 77

Iowa Residual Market Policy Counts As of 12/31/17 Premium Range Policy Counts $ 0 2,499 $ 2,500 4,999 $ 5,000 9,999 $ 10,000 19,999 $ 20,000 49,999 $ 50,000 99,999 $ 100,000 199,999 $ 200,000 and Over 184 53 24 7 374 531 789 2,440 Policy count and premium data are on a policy year basis as reported to NCCI, for policies effective from January 1, 2017, to December 31, 2017, including prorated cancellations, with all policies premium associated to the dominant state Percent of policies, percent of premium, and average policy size are calculations from the policy count and premium data 78

Policy Year Iowa Residual Market Reinsurance Pool Net Operating Results Estimated Net Operating Gains and Losses Projected to Ultimate as of 3/31/18 2017 ($1,993) 2016 $8,117 2015 $4,748 2014 $8,866 2013 $8,160 -$4,000 -$2,000 $0 $2,000 $4,000 $6,000 $8,000 $10,000 Operating Gains and Losses (in $ Thousands) From NCCI s Residual Market State Activity Report the financial statement presentation that reflects the excess of earned premium over incurred losses, less all operating expenses, plus all investment income in this state 79

Residual Market Summary National Stable residual market share Manageable operating results Residual market premium declined slightly in 2017 High levels of customer service satisfaction State Decreased premium volume Stable residual market share Self-funded operating results Please visit ncci.com for additional state and countrywide information. 80

Closing Remarks

Supplemental Information

Total Benefit Costs in Iowa 42% 58% 46% 54% 42% 58% Indemnity Medical Regional states are IL, KS, MO, NE, and SD Based on NCCI s financial data through 12/31/2017 85

Iowa Indemnity and Medical Loss Ratios 0.69 Indemnity Medical 0.52 0.50 0.38 2009 2010 2011 2012 2013 2014 2015 2016 Policy Year Based on NCCI s financial data through 12/31/2017 at current benefit level and developed to ultimate 86

Iowa Claim Frequency Per Million of On-Leveled Premium 24.7 14.8 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Policy Year Based on NCCI s financial data through 12/31/2017 adjusted to a common wage level 87

Iowa Average Indemnity Claim Severity Average Indemnity Claim Severity in $ Thousands Adjusted to Common Wage Level Actual 28.0 25.5 18.4 12.2 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 AY 2017 Policy Year Based on NCCI s financial data through 12/31/2017 for lost-time claims at current benefit level and developed to ultimate 88

Iowa Average Medical Claim Severity Average Medical Claim Severity in $ Thousands Adjusted to Common Wage Level Actual 37.4 33.4 22.1 14.6 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 AY 2017 Policy Year Based on NCCI s financial data through 12/31/2017 for lost-time claims at current benefit level and developed to ultimate 89

Current Average Voluntary Pure Loss Costs Using Iowa Payroll Distribution Pure Loss Costs All Classes TX AR WV IN UT TN KS OR DC NV AZ SD NC KY MS AL VA NE NM MD OK CO HI MO NH LA FL ME ID IA SC RI GA MT IL AK VT CT CW 2.00 1.50 1.38 1.00 0.50 State Based on the latest NCCI approved rates and loss costs in the various states 90

Iowa Average Claim Frequency Frequency per 100,000 Workers All Claims IA 993 3,096 4,089 IL 2,774 KS 3,291 MO 3,002 NE 3,553 SD 4,329 Reg 3,024 CW 3,076 Lost-Time Medical Only Based on NCCI s Statistical Plan data 91

Average Indemnity Claim Severity in the Region Lost-Time Claim Severity in $ Thousands PY 2014 PY 2015 25.0 26.7 IA IL KS MO NE SD Based on NCCI s financial data 92

Average Medical Claim Severity in the Region Lost-Time Claim Severity in $ Thousands PY 2014 PY 2015 32.0 35.4 IA IL KS MO NE SD Based on NCCI s financial data 93

Iowa Distribution of Claims by Injury Type 76% 13% 11% 0% 71% 15% 14% 0% 75% 15% 10% 0% Medical Only Temporary Total Permanent Partial Fatal & Permanent Total Regional states are IL, KS, MO, NE, and SD Based on NCCI s Statistical Plan data for jurisdiction/claim type combinations for which three or more cases exist 94

Iowa Indemnity Loss Distribution by Injury Type 17% 73% 2% 8% 27% 65% 4% 4% 33% 56% 5% 6% Temporary Total Permanent Partial Permanent Total Fatal Regional states are IL, KS, MO, NE, and SD Based on NCCI s Statistical Plan data for jurisdiction/claim type combinations for which three or more cases exist 95

Iowa Medical Loss Distribution by Injury Type 20% 65% 1% 14% 0% 28% 55% 4% 12% 1% 30% 48% 8% 13% 1% Temporary Total Permanent Partial Permanent Total Medical Only Fatal Regional states are IL, KS, MO, NE, and SD Based on NCCI s Statistical Plan data for jurisdiction/claim type combinations for which three or more cases exist 96

Glossary

Glossary Assigned Risk Adjustment Program (ARAP) An assigned risk market program that surcharges residual market risks based on the magnitude of their experience rating modification. Calendar Year (CY) Experience of earned premium and loss transactions occurring within the calendar year beginning January 1, irrespective of the contractual dates of the policies to which the transactions relate and the dates of the accidents. Calendar-Accident Year (AY) The accumulation of loss data on all accidents with the date of occurrence falling within a given calendar year. The premium figure is the same as that used in calendar year experience. Claim Frequency The number of claims per unit of exposure; for example, the number of claims per million dollars of premium or per 100 workers. 98

Glossary Claim Severity The average cost of a claim. Severity is calculated by dividing total losses by the total number of claims. Combined Ratio The sum of the (1) loss ratio, (2) expense ratio, and (3) dividend ratio for a given time period. Detailed Claim Information (DCI) An NCCI Call that collects detailed information on an individual workers compensation lost-time claim basis, such as type of injury, whether or not an attorney was involved, and the timing of the claim s report to the carrier. Direct Written Premium (DWP) The gross premium income adjusted for additional or return premiums, but excluding any reinsurance premiums. 99

Glossary Indemnity Benefits Payments by an insurance company to cover an injured worker s time lost from work. These benefits are also referred to as wage replacement benefits. Loss Ratio The ratio of losses to premium for a given time period. Lost-Time (LT) Claims Claims resulting in indemnity benefits (and usually medical benefits) being paid to or on behalf of the injured worker for time lost from work. Medical-Only Claims Claims resulting in only medical benefits being paid on behalf of an injured worker. Net Written Premium (NWP) The gross premium income adjusted for additional or return premiums and including any additions for reinsurance assumed and any deductions for reinsurance ceded. 100

Glossary Permanent Partial (PP) A disability that is permanent but does not involve a total inability to work. The specific definition and associated workers compensation benefits are defined by statute and vary by jurisdiction. Policy Year (PY) The year of the effective date of the policy. Policy year financial results summarize experience for all policies with effective dates in a given calendar year period. Schedule Rating A debit and credit plan that recognizes variations in the hazard-causing features of an individual risk. Take-Out Credit Program An assigned risk program that encourages carriers to write current residual market risks in the competitive voluntary marketplace. Temporary Total (TT) A disability that totally disables a worker for a temporary period of time. 101

Appendix

NCCI s Workers Compensation Resources Financial Aggregate Calls Used for aggregate ratemaking Statistical Plan for Workers Compensation and Employers Liability Insurance (Statistical Plan) Used for class ratemaking Detailed Claim Information In-depth sample of lost-time claims Policy Data Policy declaration page information 103

Financial Aggregate Calls Collected Annually Policy and calendar-accident year basis Statewide and assigned risk data Premiums, Losses, and Claim Counts Evaluated as of December 31 Purpose Basis for overall aggregate rate indication Research 104

Policy Year Financial Aggregate Data Policy Expiration Date Policy Year 2015 Policy Year 2016 Policy Year 2019 1/1/2015 1/1/2016 12/31/2016 1/1/2019 12/31/2019 Policy Effective Date 105

Calendar-Accident Year Financial Aggregate Data Policy Expiration Date Calendar- Accident Year 2016 Calendar- Accident Year 2017 Calendar- Accident Year 2020 1/1/2016 1/1/2017 12/31/2017 1/1/2020 12/31/2020 Policy Effective Date 106

Statistical Plan for Workers Compensation and Employers Liability Insurance (Statistical Plan) Data Experience by Policy Detail Exposure, premium, and experience rating modifications Individual claims by injury type Purposes Classification relativities Experience Rating Plan Research 107

Valuation of Statistical Plan Data 1st Report Valuation 2nd Report Valuation 3rd Report Valuation 4th Report Valuation 5th Report Valuation Policy Effective 18 Months 30 Months 42 Months 54 Months 66 Months 108